"I told all the concerned parties, including the president and the prime minister, that I must have full authority to be able to carry out my full duties," he said.

Haniya will take control of the interior ministry until a replacement for Kawasmeh is found, according to government officials.

Gun battles

A gun fight between Hamas and Fatah forces erupted in Gaza City shortly after the minister resigned.

The shooting broke out near the headquarters of the pro-Fatah National Security force.

Both the dead men in the morning shoot-out were Fatah activists.

Sources in Fatah said tensions were so great with Hamas that their unity government could collapse within days.

Hamas's armed wing said its men had rushed to the scene after Fatah fighters opened fire from rooftops at homes belonging to its members.

Fatah said Hamas fighters torched an office belonging to the group at the scene of the clashes.

Clashes were sparked by the killing of two Fatah-linked fighters in an ambush [AFP]

Hospital officials said a civilian, shot in factional fighting on Sunday, died of his wounds, raising to seven the number of people killed since a new round of clashes erupted over the weekend. At least 40 people have been wounded.

Under the ceasefire brokered by Egyptian mediators and announced by Hamas and Fatah leaders in Gaza on Sunday, both sides were said to have removed their fighters from the streets and swapped about 20 hostages.

Nour Odeh, Al Jazeera's correspondent in Gaza, said skirmishes were still going on.

She said snipers for the military wings of both Hamas and Fatah had taken position on rooftops in Gaza City.

Internal fighting

The shootings on Sunday were the worst internal fighting in Gaza since a ceasefire between the groups was agreed to in February.

Fighters from the opposing organisations set up makeshift checkpoints throughout Gaza after the shootings.

Shops closed and some people left their homes to escape the threat of further violence, Odeh reported.

Palestinian police were recently deployed in Gaza under a new security plan in an attempt to maintain order and ease tensions between Fatah and Hamas, which formed a unity government in March.

However, fighters from the al-Qassam Brigades and the Fatah-dominated national security forces fought on Friday in clashes that wounded at least six people.

Previous police deployments in Gaza have not fully secured the territory since Israel withdrew troops and settlers in 2005.